10-Year Gold Price Chart

Week of January 23rd Gold Market Update

On the final day of an eventful week of trading, precious metals are conceding marginal value. In all, however, gold and silver have fared particularly well this week thanks to some events that unfolded in Europe. Quite honestly, this week saw investors focus almost completely on the European Central Bank meeting for the month of January. Because it was widely expected that the ECB would make a monetary policy shift this week, it is pretty easy to see why investors were so concerned with what was going on in Europe.

Apart from the attention paid to the EU, investors also were dealt some minor economic data from Asia. Both China and Japan are expecting 2015 to be a good year of growth, and both governments cited the falling price of crude oil as the reason behind that. After 2014 was a struggle for both China and Japan, both countries will be happy to see some upbeat growth from the struggling Asian region of the world.

ECB Meeting Consumes Market Attention

Straight from the beginning of last week, investors were already preoccupied with wondering what the European Central Bank meeting would mean for the European Union. While most everyone was under the impression that the ECB would announce quantitative easing measures, no one knew the extent of this plan.

Late last week, with the European Court of Justice ruling that effectively legalized the ECB’s QE plans, the global marketplace was more or less convinced that there was no way a QE announcement wouldn’t be made at this week’s meeting. Finally, when yesterday rolled around, Mario Draghi, ECB president, announced that the ECB would be purchasing 60 billion euros worth of bonds beginning in early 2016. Though the announcement itself was not all that surprising, the fact that the QE plan was so large did catch some investors off guard. As a result of the announcement, US stocks, the USD, and precious metals all made gains. As of the writing of this post early Friday, the USD is continuing to surge forward.

As we look ahead to next week, it will be interesting to see if gold and silver are able to hang on to the past few weeks’ worth of gains. As it stands, gold is over the $1,300 threshold while silver is holding above $18/ounce. While there are some people who think precious metals may fall victim to profit-taking, the overall level of uncertainty exhibited by investors speaks volumes and very well might continue aiding gold and silver spot values.